Material Management - MCQ from Study Material (Basic) - LDCE Mock Test

Comprehensive Multiple Choice Questions (MCQs) based on the Material Management, covering all 12 chapters including Introduction, Procurement Policy, Methods of Procurement (IFD, Rate Contracts, Direct Purchase, Global Tenders), EMD & Performance Security, Tender Evaluation & TPC Procedures, Contract Placement, Import Procurement, Delivery Period Management, Liquidated Damages, Force Majeure, Receipt & Inspection of Stores, Payment of Bills, and Arbitration/Dispute Settlement. Essential study material for government employees across departments preparing for Limited Departmental Competitive Examination (LDCE), promotion tests, and procurement-related assessments. Aligned with DGS&D practices, Defence Procurement Manual-2005 guidelines, and financial propriety principles applicable to public sector procurement.

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Material Management

1 / 30

According to the Government Purchase Policy, what preference can be granted to Central Public Sector Enterprises (CPSEs)?

They are exempted from furnishing both EMD and Performance Security Deposit.

A purchase preference at the lowest valid price (L1) if their quoted price is within 10% of the L1 price.

A price preference of up to 15% over the lowest bidder.

They are automatically awarded the contract if their bid is within 25% of the lowest price.

2 / 30

What is the recommended course of action when post-tender negotiations are deemed necessary?

Negotiate only with the lowest tenderer (L-1).

Negotiate with all bidders simultaneously to get the best price.

Negotiate with the top three lowest bidders.

Cancel the tender and issue a new one.

3 / 30

How should disputes with Public Sector Undertakings (PSUs) be handled initially?

By negotiating directly with the CEO of the PSU.

By appointing a Sole Arbitrator as per the standard contract clause.

By immediately filing a case in a court of law.

By referring them to the permanent arbitration machinery in the Department of Public Enterprises.

4 / 30

In case of procurement from overseas suppliers, what does 'F.O.B.' stand for?

Forwarding on Board

Free on Board

Freight on Board

Fully Operational Base

5 / 30

What is the purpose of the 'Force Majeure' clause in a contract?

To excuse a party from non-fulfilment of contractual obligations due to circumstances beyond their control.

To allow the supplier to increase the price if raw material costs go up.

To give the purchaser the right to cancel the contract at any time without reason.

To enforce stricter penalties on the supplier for any delay in delivery.

6 / 30

When can a repeat order be placed on a supplier?

Any time within 5 years of the original order.

Within 12 months from the date of supply against the previous order, for an identical store.

Only if the new requirement is for a completely different item.

When there is a clear upward trend in the price of the item.

7 / 30

What is the primary reason for constituting Tender Purchase Committees (TPCs)?

To scrutinise tenders and enable faster decision-making by delegating financial powers.

To negotiate prices with every single bidder.

To draft the technical specifications for the items being procured.

To conduct physical capacity verification of all new vendors.

8 / 30

What is a 'severable' contract?

A contract where each instalment constitutes a separate contract.

A contract that can be cancelled by either party without any reason.

A contract that is split between multiple suppliers.

A contract that covers both stores and services.

9 / 30

What is the purpose of vendor evaluation?

To periodically review the performance of vendors based on quality, delivery, price, and service.

To determine the amount of Performance Security Deposit required.

To approve the technical specifications of the product.

To calculate the final price to be paid to the supplier.

10 / 30

Who is considered the 'purchaser' in all cases of defence procurement according to the manual?

The Ministry of Defence.

The President of India.

The General Manager of the concerned Ordnance Factory.

The Ordnance Factory Board, Kolkata.

11 / 30

Which of the following is NOT a method of procurement mentioned in the manual?

Direct Purchase

DGS&D Rate Contract (R/C)

Auctioning

Inter Factory Demand (IFD)

12 / 30

What is the purpose of preparing a Store Holder Inability Sheet (SHIS)?

To list all the suppliers who are unable to meet the delivery schedule.

To declare that the factory store is unable to hold any more material due to lack of space.

To get approval for writing off damaged or obsolete stores.

To show the requirement, present stock and dues, and net requirement for an item.

13 / 30

What action should be taken if a successful tenderer fails to furnish the required Performance Security Deposit?

The delivery period of the contract is automatically extended.

The contract value is reduced by 10% as a penalty.

The Earnest Money Deposit (EMD) furnished by them may be forfeited.

The requirement for the deposit is waived and the contract proceeds.

14 / 30

In the event of a single valid quote being received against a Limited Tender Enquiry (LTE), how should the case be progressed?

It can be accepted immediately without any additional checks.

It is progressed as an LTE case, but with precautionary measures like obtaining CFA approval to open the quote.

It is treated as a procurement against Single Tender Enquiry and requires separate approval.

It must be automatically cancelled and re-tendered.

15 / 30

What is the primary role of the Authority Holding Sealed Particulars (AHSP)?

To inspect the final goods before they are dispatched.

To draw up the specification of an item and hold its detailed particulars.

To approve the financial sanction for the procurement.

To act as the sole supplier for a particular item.

16 / 30

If a dispute arises from a contract that includes the standard arbitration clause, who is responsible for appointing the Sole Arbitrator?

The contractor and purchaser must mutually agree on an arbitrator.

A judge from the local competent court of law.

The Director General, Ordnance Factories.

The Chairman of the Tender Purchase Committee that approved the contract.

17 / 30

What is the standard payment term for contracts as per the General Conditions of contract mentioned in the manual?

95% against proof of despatch and balance 5% on receipt of stores in good condition.

100% payment on placement of the supply order.

100% payment only after the stores have been used and tested by the end-user.

50% advance payment and 50% on receipt of stores.

18 / 30

A 'Force Majeure' clause is intended to provide relief from contractual obligations due to what kind of circumstances?

Failure to secure raw materials due to poor planning.

Downward trend in market prices.

Rejection of an advance sample by the purchaser.

Irresistible compelling circumstances beyond one's control.

19 / 30

In a Limited Tender Enquiry (LTE), what is the normal minimum number of suppliers to whom the enquiry should be sent?

Three

Ten

Six

There is no minimum number specified.

20 / 30

How are tenders received after the specified time for opening treated?

They are opened and considered if the price is lower than other bids.

They are opened separately by the Tender Purchase Committee and considered on merit.

They are marked as 'Late', kept sealed, and returned to the firm.

They are accepted but a penalty is applied to their quoted price.

21 / 30

What is the standard rate for recovering Liquidated Damages (LD) for delayed delivery of stores?

2% per month (or part thereof) of the price of the store delivered late, up to a maximum of 5%.

1% per week of the total contract value, up to a maximum of 10%.

A fixed penalty of 5% of the total contract value.

5% per month of the price of the undelivered stores, with no maximum limit.

22 / 30

What is the standard grace period automatically available in contracts for the delivery of stores?

30 days

15 days

21 days

7 days

23 / 30

According to the manual, what is the 'essence of the contract' in relation to supply timelines?

The quality specification of the stores.

The price of the stores.

The time for and the date of delivery of the stores.

The submission of the Performance Security Deposit.

24 / 30

What is the preferred rate for Performance Security Deposit payable by a supplier?

A fixed amount of Rs. 5 Lakhs irrespective of contract value.

2% of the contract value.

10% of the contract value.

5% of the estimated tender value.

25 / 30

What is the standard quantum of Earnest Money Deposit (EMD) to be charged from tenderers who are not registered?

5% of the estimated value, with a ceiling of Rs. 5 Lakhs.

10% of the contract value, with no ceiling.

2% of the estimated value, with no ceiling.

2% of the estimated value, with a ceiling of Rs. 2 Lakhs.

26 / 30

Under what circumstances may procurement from a single source (Single Tender) be resorted to?

When the value of the procurement is below a certain financial threshold.

When only one particular firm is the manufacturer, in an emergency, or for standardisation of parts.

When the sources of supply are definitely known and limited to a few firms.

When the desired delivery schedule is urgent and cannot be met through open tenders.

27 / 30

For indigenously available direct materials, what is the maximum provisioning period for which action can be taken?

6 months, less stocks and dues.

12 months, less stocks and dues.

18 months, less stocks and dues.

24 months, less stocks and dues.

28 / 30

What is a Rate Contract (RC) as defined in the manual?

A contract where the price for stores is negotiated each time an order is placed.

An agreement that guarantees the supplier a minimum order quantity over the contract period.

An agreement to supply stores at specified prices during a certain period, with no guaranteed minimum drawal.

A one-time purchase order for a fixed quantity of stores at a specified price.

29 / 30

What is the definition of 'Stores' as described in the manual?

Raw materials and components directly used in defence production only.

Primarily books, publications, and periodicals for libraries.

All articles and materials acquired for Government use, including plant, machinery, furniture, and clothing.

Only expendable and consumable articles used for production.

30 / 30

According to the manual, what is the primary purpose of the 'Material Management and Procurement Manual' for Ordnance Factories?

To provide instructions exclusively for the procurement of Plant & Machinery.

To act as a guide for revenue procurement and supplement the Defence Procurement Manual-2005.

To detail the procedure for the disposal of scraps and surpluses.

To completely replace the Defence Procurement Manual-2005 with rules specific to Ordnance Factories.

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The average score is 59%

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Material Management – MCQ from Study Material (Basic)

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